State ex rel. Miller v. National Farmers Organization
| Decision Date | 30 May 1979 |
| Docket Number | No. 62450,62450 |
| Citation | 278 N.W.2d 905 |
| Parties | STATE of Iowa, ex rel. Thomas J. MILLER, Attorney General, Appellant, v. NATIONAL FARMERS ORGANIZATION, Appellee. |
| Court | Iowa Supreme Court |
Thomas J. Miller, Atty. Gen., and Douglas R. Carlson, Asst. Atty. Gen., for appellant.
Lawrence F. Scalise and Thomas J. Levis, of Scalise, Scism, Gentry, Brick & Brick, Des Moines, for appellee.
Considered by LeGRAND, P. J., and REES, UHLENHOPP, McCORMICK, and McGIVERIN, JJ.
The question here is whether the trial court erred in holding that the State could not obtain an injunction under the Iowa Consumer Credit Code to halt debt collection practices allegedly used by the National Farmers Organization in an effort to collect back dues and assessments. Although we believe the trial court erred in holding that the ICCC does not apply to nonprofit corporations, we affirm the court on the ground that the back dues and assessments are not debts affected by the relevant provisions of the ICCC.
The attorney general has authority to seek injunctions to restrain debt collection practices proscribed by the ICCC. See §§ 537.6103, 537.6110, The Code. Prohibited practices are listed in section 537.7103, article seven. The present injunctive action was initiated against the NFO pursuant to these provisions. The petition averred that the NFO was violating section 537.7103 through representations and activities of agents seeking to collect back dues and assessments allegedly owed under membership agreements entered by Iowa residents years earlier.
In its answer, the NFO denied it engaged in prohibited practices and also denied the applicability of the ICCC to its efforts to collect the debts. The NFO subsequently presented the issue of the applicability of the ICCC to the trial court by motion to adjudicate law points pursuant to Iowa R.Civ.P. 105.
The form of NFO membership agreement under which the debts allegedly arose was before the court as part of the State's petition. The NFO asserted the ICCC was inapplicable because article seven proscribes collection practices only relating to debts resulting from the granting of credit, and the debts involved here were not based on credit transactions. Passing this issue, the trial court sustained the motion to adjudicate law points on the ground that the ICCC does not apply to nonprofit corporations.
In this appeal, the NFO seeks to sustain the adjudication on both grounds.
I. We believe the ground relied on by the trial court is untenable. Examination of the ICCC shows it regulates debt collection practices without any limitation attributable to the nature of the entity engaging in them. A debt collector is a "person" who attempts to collect debts. § 537.7102(3). "Person" includes an "organization." § 537.1301(32)(b). "Organization" means a "corporation, government or governmental subdivision or agency, trust, estate, co-operative, or association." § 537.1301(30).
No distinction is made in the statute between profit and nonprofit entities. The legislative purpose would not be served by a distinction of that kind. If a debt collection practice is wrong when engaged in by a profit-making entity, it is also wrong when engaged in by a nonprofit entity. It is reasonable to believe the legislature intended the consumer to be protected from proscribed collection practices in both situations. No basis appears in the statute for a contrary conclusion.
We hold that article seven of the ICCC applies to nonprofit as well as profit organizations.
II. When the reason given by a trial court for its adjudication is erroneous, the adjudication will nevertheless be sustained if a separate ground, properly urged, is correct. Hawkins/Korshoj v. State Board of Regents, 255 N.W.2d 124, 127 (Iowa 1977). Therefore we consider the alternative ground asserted by the NFO. Its merits are also answered by statutory definitions.
"Debt collection" under article seven means "an action, conduct or practice in soliciting debts for collection or in the collection or attempted collection of a debt." § 537.7102(2). In its ordinary meaning a "debt" is a sum charged which is due and owing, a fixed obligation as opposed to something payable on a contingency. E. g., United Missouri Bank of Kansas City v. Danforth, 394 F.Supp. 774 (W.D.Mo.1975). However, "debt" has a narrower meaning under section 537.7102(1) of article seven:
"Debt" means an actual or alleged obligation arising out of a consumer credit transaction, or a transaction which would have been a consumer credit transaction either if a finance charge was made, if the obligation was not payable in installments, if a lease was for a term of four months or less, or if a lease was of an interest in land.
Hence article seven applies only to debts which arise from consumer credit transactions, subject to the stated exception.
The dispositive issue is whether a debt for dues and assessments under the NFO membership agreement...
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